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You Cannot Get Title Insurance on Mineral Rights

You Cannot Get Title Insurance on Mineral Rights

You cannot get title insurance on mineral rights.
How do I know this? In 2006 I took the introductory course for new landmen at the University of Oklahoma. The course was an intensive two-day course offered by a CPL (a Certified Professional Landman — the highest and most prestigious designation for landmen).

Most of the attendees were from Texas and Oklahoma. About half of the attendees were middle aged women working for title and abstract companies — the very people that go to the court house to build abstracts for the attorneys who read the abstracts and write title opinions.

I asked this specific question: Can you get title insurance on mineral rights? The response from the presenter was a flat out, “No.” You can only get title insurance on surface rights.

Just because attorneys rendering title opinions cannot offer title insurance does not mean that they cannot render an opinion regarding whether or not the minerals are included with the land.

Asuming that the abstract is up to date and complete, the attorney looking at the abstract is looking at every piece of paper that has ben filed at the court since Oklahoma statehood — 1907. In many cases the documents will predate statehood when the Oklahoma Territory and Indian Territory became collectively known as the State of Oklahoma.

In Oklahoma’s Indian Territory it all starts with allotment — when an Indian (a/k/a native American) was given a quarter section for his homestead and three-quarters of a section for his allotment. He therefore has two pieces of property comprising approximately 640 acres in fee simple absolute. He owns everything from the center of the earth to the heavens….. well, let me rephrase that. He doesn’t own the land per se, he owns the rights to everything — he owns the whole bundle of rights, from the center of the earth to where the US government lets the planes fly. We say that he owns that whole bushel basket full of rights in fee simple absolute.

The allotment documents do not specifically say that he owns the mineral rights, a/k/a “oil, gas and other minerals.” It just is that way.

So let’s say Joe Citizen happens to get hold of his abstract and wants to see if he owns his minerals. He cannot find any place on his abstract where the deeds says that the Grantor “retains” or “reserves” a certain percentage of the minerals when granting the land to the Grantee. That means that the minerals were conveyed along with the surface. The Grantor conveys the whole bushel basket full of rights in fee simple.

Now let’s say that the Grantor reserves the minerals. He then creates a separate basket of mineral rights for himself. The deed for the conveyance of the surface rights shows that a certain percentage of the minerals were reserved or retained. Now there are two estates: the surface estate and the mineral estate. (The mineral estate is dominant, by the way.) An attorney will only be able to get title insurance for the surface rights.

The mineral estate takes on a life of its own once it is severed from the surface estate. There will not be a Mineral Deed created until the mineral estate is conveyed. This is where it gets tricky and heirs often do not even know they own the minerals. Eighty years later it becomes like looking for grandmas’ jewelry after it has been divided up. It’s the job of a professional landman to track down all those little pieces of mineral rights that have been divided up.

In short, that’s why you cannot get title insurance on mineral rights in Oklahoma. It just gets too complicated otherwise.